When benefits outweigh employment

Restaurateurs looking to rehire find some employees prefer unemployment

By , Daily Memphian Updated: April 24, 2020 4:22 PM CT | Published: April 24, 2020 2:34 PM CT

Many Memphis restaurateurs have received their Paycheck Protection Program loans and now they have money to hire back their employees.

Easier said than done.


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Above all, they wish they could use the money to pay employees when they reopen, not now. The city remains under a safer-at-home order that keeps restaurants and other non-essential businesses closed until May 5, and some say they won’t reopen that early even if given the go-ahead.

And, they say, they’ll have trouble getting their employees to return to work because they’re making more money drawing unemployment.

Tennessee unemployment ranges from $30-$275 per week, but the federal government is kicking in $600 per week for everyone on unemployment through July, regardless of the salary they were making before being laid off for the COVID-19 shutdown.

That adds up to $32,760-$45,500 annually for unemployed Tennesseans, more money than many restaurant employees were making while working.

Indeed.com says the average salary for a restaurant server in Memphis is $9.68 per hour, which is $20,134 for full-time employment. That seems low, restaurateurs say, but even kitchen staff making $15 per hour make less at $31,200.

Jeannette Comans owns the Blind Bear in Downtown Memphis. Of the 13 employees she had before she shut her dining room March 20, only four have returned.

“I’ve called people and said I’m rehiring and asked them if they want to come back to work and they’ve said, ‘Um, I’m kind of making more than I was before and not doing anything,’” she said.

If restaurateurs are unable to staff their restaurants to meet PPP guidelines, they could end up owing for what they expect to be a forgivable loan, and that could put them out of business.

“There is no way I could pay back the amount of money I borrowed,” said Ryan Trimm, co-owner of Sweet Grass, Sunrise and 117 Prime.


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In brief, even the guidelines surrounding forgiveness of the loan are Byzantine and interpreted by experts — lawyers, bankers, CPAs — in different ways. But this is certain: 75% or more of the loan must be used to pay employees during the covered period, which is eight weeks from the day the loan funds are disbursed; up to 25% can be used for other covered expenses such as rent or mortgage interest and utilities.

To meet the 75% payroll requirement, they have to have employees to hire. Will they be there?

Trimm is working his way down his list.

“Yesterday about 95% of the people I talked to said they would come back,” he said. “But today I’ve called 14 or 15 people and not a single person has called me back.”

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And while Trimm and Comans don’t plan, at least right now, to open May 5, they still have to pay employees to hit the magic 75% for loan forgiveness, even if they bring them back to clean, paint — whatever.

Shawn Danko, owner of Kooky Canuck, plans to open as soon as he’s able. He’s calling people back to work and said that so far, the news is good.

“I’ve not had anyone tell me yet that they’re not coming back,” he said. “We’ve looked at the schedule of who we need and so far so good.”

The National Restaurant Association is lobbying the federal government to ease the date requirements for rehire — June 30 is the present deadline — because of safer-at-home orders that exist around the country and the assumption that even when restaurants open, they are unlikely to be able to do so at full capacity.

Kelly English owns Restaurant Iris and The Second Line. He said that while some of his employees make more working for him than they do drawing unemployment, some still aren’t ready to come back to work.


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Trimm said the same thing. Some are scared. Some have children and no child care. 

Trimm says he believes he’s required to report it.

“I believe that if they do not come back, I have to report it to the unemployment office and they lose their unemployment,” he said.

Comans said she doesn’t know if she’s required to report it, but she does know this:

“Some of them, I understand their issues. But I think that some are just very happy on unemployment,” she said. “I’m not promising that in four months, when that $600 a week runs out, that their job will be here to offer back to them.”

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Topics

Jeannette Comans Ryan Trimm Kelly English COVID reopening
Jennifer Biggs

Jennifer Biggs

Jennifer Biggs is a native Memphian and veteran food writer and journalist who covers all things food, dining and spirits related for The Daily Memphian.


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